A convertible bond has a face value of $1,000 and the conversion price is $60 per share. The stock is selling at $25 per share. The bond pays $85 per year in interest and is selling in the market for $945. It matures in 7 years. Market rates are 10% annually.
(I) What is the conversion ratio?
(II) What is the conversion value?
If a $100,000 Treasury bond futures contract changes by 5/32, what is the dollar change?